Texas House Considers Changing Law that Allows Rent-to-Own Stores to Pursue Criminal Charges Against Customers

Likely surprising to many Texans, an obscure law on the books in the state makes it possible for rent-to-own stores to initiate criminal charges against their customers for falling behind on payments. A recent investigation spearheaded by the Texas Tribute and personal finance website NerdWallet discovered that thousands of customers of rent-to-own stores have faced police reports for “theft-of-service”, and many of those facing such criminal charges are in Texas. In response, the chairman of the Texas House Business and Industry Committee has announced that his committee will be “aggressively” looking into amending the law.

How Will a Change in Statute Affect Customers?

The current law that allows rent-to-own companies in Texas to pursue criminal charges against customers dates back to the 1970s. Written largely by rental industry lobbyists, the statute presumes that a person has stolen a rented item if they have signed a rental contract, failed to return the item as required by the contract, and not responded to the rent-to-own company’s certified letter. Remarkably, the current law doesn’t require proof that the certified letter was received by the customer, just proof that it was mailed.

Following the joint investigation by the Texas Tribune and NerdWallet, committee chairman Rep. René Oliveira (D-Brownsville) stated that he was “stunned” to find out about the law, further remarking that it “seems extraordinary that you are presumed almost to be guilty, against the presumption of innocence that we know and believe in our Constitution.”

The 1970s statute was pushed for by rental companies who argued that they were losing significant amounts of cash when leased heavy machinery wasn’t returned by customers. The Texas Tribune’s review of court records in the ensuing decades, however, found that several rent-to-own businesses appear to be utilizing the statute more assertively than those equipment-rental companies behind its initial passage. For example, in one county in Texas, police reports show that six rent-to-own businesses pursued charges against over 400 customers since 2015, with some facing felony theft charges.

Will the Statue be Changed?

Other state and local lawmakers are also pushing for the statute to be changed. Jason Milam, the president of the McLennan County Criminal Defense Lawyers’ Association, has suggested that Texas can adopt the approach of Virginia and South Carolina, who explicitly exclude rent-to-own contracts from their state’s “theft-of-service” law. Oliveira has stated that he believes that the law should be changed so that rent-to-own businesses have to rely on the same civil collection methods that other retailers use.